NYSE: MXC

While
we own oil and gas properties in other states, the majority of our activities are centered in West Texas and Southeastern New Mexico.
The Company also owns producing properties and undeveloped acreage in fourteen states. We acquire interests in producing and non-producing
oil and gas leases from landowners and leaseholders in areas considered favorable for oil and gas exploration, development, and production.
In addition, we may acquire oil and gas interests by joining in oil and gas drilling prospects generated by third parties. We may also
employ a combination of the above methods of obtaining producing acreage and prospects. In recent years, we have placed primary emphasis
on evaluating and purchasing producing oil and gas properties, including working, royalty, and mineral interests, as well as prospects
that could meaningfully impact on our reserves. All of the Company’s oil and gas interests are operated by others.

From
1983 to 2026, Mexco Energy Corporation made numerous acquisitions of royalties, overriding royalties, minerals, and working interests
in producing oil and gas properties, including the following most significant acquisitions:

1990-1994 Royalty
interests with an aggregate purchase price of approximately $501,000, covering multiple wells
in the Gomez (Ellenberger) Field of Pecos County, Texas.

1993-2014 Tabbs
Bay Oil Company and Thompson Brothers Lumber Company, which were dissolved in 1957 and 1947,
respectively. Purchase covering thousands of acres located in 27 counties in Texas, 3 parishes
in Louisiana, and one county in Arkansas, consisting of various mineral, royalty, and overriding
royalty interests.

1997 Forman
Energy Corporation, purchase price of $1,591,000, consisting primarily of working interests
in approximately 634 wells located in 12 states.

2004-2005 Royalty
interests, purchase price of $1,354,000, covering 145 producing wells in the Cotton Valley
formation in Freestone and Limestone Counties, Texas, and Jackson Parish, Louisiana. This
acreage also contains additional potential undeveloped locations.

2007-2008 Non-operated
working interests, purchase price of $425,000, covering 2 properties in Lea County, New Mexico.

Royalty
(mineral) acreage, purchase price of $2,279,000, consisting of 122 mineral acres in the Newark East Field (Barnett Shale) of Tarrant
County, Texas representing an approximate 21.45% royalty interest, and 522 additional mineral acres in the same field containing 6 producing
natural gas wells and additional undeveloped drilling locations. Purchased additional interests in March 2009 for $49,000.

2010-2012 Southwest
Texas Disposal Corporation, purchase price of $478,000, consisting of royalty interests in
over 300 wells located in 60 counties and parishes of 6 states.

Overriding
royalty interests, purchase price of $1,650,000, covering 5,120 gross acres over 8 sections in the Haynesville trend area of DeSoto Parish,
Louisiana, containing 6 horizontal producing wells and additional potential undeveloped drill sites. The Company paid $1.46 million in
cash and the remainder was paid as 26,833 shares of its common stock issued from treasury shares.

Non-operating
working interests, purchase price of $670,000, covering 160 gross acres in the Fuhrman-Mascho Field of Andrews County, Texas containing
5 producing wells in the Grayburg and San Andres formations and additional potential drill sites. Purchased additional working interests
in March 2012 for $275,000.

TBO
Oil and Gas, LLC, purchase price of $1,150,000, consisting of working interests in approximately 280 wells located in 16 counties of
3 states.

4

2014 Royalty
interests, purchase price of $1,780,000, covering approximately 2,400 wells in eight states,
primarily in Texas.

Non-operated
working interests, purchase price of $1,490,000, covering 193 producing wells located in 11 counties across Louisiana, Oklahoma, New
Mexico, and Texas.

2019 Royalty
interest investment of $300,000 for a less than 1% investment commitment in a limited liability
company (“LLC”), capitalized at approximately $50 million to purchase royalty interests consisting
of minerals located in the Marcellus and Utica areas of Ohio. This LLC has returned 115%
of the total investment since inception in fiscal 2020.

2022-2023 Royalty
and overriding royalty interests, purchase price of $1,623,000, covering 103 producing wells
and several additional undeveloped locations in the Eagle Ford Shale area of Dimmit County,
Texas, the Haynesville Shale trend across Louisiana and Texas, and in Atascosa and Karnes
Counties, Texas.

Royalty
interest investment of $2,000,000 for an approximate 2% investment commitment in a limited liability company, capitalized at approximately
$100 million to purchase royalty interests consisting of minerals located in the Marcellus and Utica areas of Ohio. During 2025, an additional
$227,429 was expended to participate in a voluntary optional cash call and acquire its proportionate share of the resulting non-consenting
interests, increasing its capitalized investment. As of the date of this report, this investment is fully funded, and 25% of the investment
has been returned.

2023-2024 Royalty
interests, purchase price of $1,788,400, covering 360 producing wells and additional potential
locations for development in Weld County, Colorado, Caddo Parish, Louisiana, and multiple
counties throughout Texas.

2024-2025 Royalty
interests, purchase price of $1,972,000, covering approximately 750 producing wells and additional
undeveloped drilling locations across multiple counties in Colorado, Louisiana, Montana,
New Mexico, Nebraska, North Dakota, South Dakota, Texas, and Wyoming.

2025-2026 Royalty
interests, purchase price of $817,700, covering approximately 262 producing wells, additional
interests in 19 previously owned wells with additional development potential across counties
in Colorado, Louisiana, and Texas, and 40 undeveloped net leasehold in Eddy County, New Mexico.

Industry
Environment and Outlook

Commodity
prices remained volatile during fiscal 2026 due to shifting global supply-and-demand fundamentals, OPEC+ production decisions, geopolitical
tensions, inflationary pressures, interest rate uncertainty, and concerns regarding the pace of global economic growth. In addition,
fluctuations in oil and natural gas prices, evolving trade policies, and continued uncertainty in the broader economic environment may
continue to impact our industry and operating results. In light of these challenges and the ongoing volatility in commodity markets,
our primary business strategies for fiscal 2027 will continue to include: (1) optimizing cash flows through operating efficiencies and
cost reductions, (2) divesting non-core assets, and (3) working to balance capital spending with cash flows to minimize borrowings and
maintain ample liquidity.

See
Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for discussion of our fiscal
2026 operating results and potential impact on fiscal 2027 operating results due to commodity price changes.

Oil
and Gas Operations

As
of March 31, 2026, oil contributed approximately 81% of our oil and natural gas sales and approximately 46% of our total proved reserves
volumes for fiscal 2026. Revenues from oil and gas royalty interests accounted for approximately 49% of our total operating revenues
and income from investments in LLCs for fiscal 2026.

5

The
Company is primarily focused on two areas: 1) the Delaware Basin located in the Western portion of the Permian Basin, including Lea
and Eddy Counties, New Mexico and Reeves and Loving Counties, Texas, and 2) the Midland Basin located in the Eastern portion of the
Permian Basin, including Reagan, Upton, Midland, Martin, Howard, and Glasscock Counties, Texas. The Permian Basin in total accounts
for 75% of our discounted future net cash flows from proved reserves and 76% of our operating revenues.

The Permian Basin is one of the oldest and most prolific producing basins in North America and has been a significant source of oil production
since the 1920s. The Permian Basin contains numerous oil and gas-bearing formations that have supported commercial production for decades.

The Delaware Basin properties, encompassing 39,129 gross acres, 209 net acres, 769 gross producing wells, or 4 net wells, account for
approximately 53% of our discounted future net cash flows from proved reserves as of March 31, 2026. For fiscal 2026, these properties
accounted for 54% of our operating revenues. Of these discounted future net cash flows from proved reserves, approximately 14% are attributable
to proven undeveloped reserves, which would be developed through new drilling.

The Midland Basin properties, encompassing 115,077 gross acres, 232 net acres, 1,786 gross producing wells, or 4 net wells, account for
approximately 21% of our discounted future net cash flows from proved reserves as of March 31, 2026. For fiscal 2026, these properties
accounted for 21% of our operating revenues.

Mexco believes its most important properties for future development by horizontal drilling and hydraulic fracturing are located in Lea
and Eddy Counties, New Mexico of the Delaware Basin and the Midland Basin in Midland, Reagan and Upton Counties, Texas.

For
more on these and other operations in this area see “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Liquidity and Capital Resources Commitments”.

We
own partial interests in approximately 8,100 producing wells all of which are located within the United States in the states of Texas,
New Mexico, Oklahoma, Louisiana, Alabama, Arkansas, Wyoming, Kansas, Colorado, Montana, Virginia, North Dakota, South Dakota and Ohio.
Additional information concerning these properties and our oil and gas reserves is provided below.

The
following table indicates our oil and gas production in each of the last five years:

Year
Oil(Bbls)
Gas
(Mcf)

2026
82,133
681,794

2025
83,564
570,012

2024
69,999
502,879

2023
73,968
534,363

2022
61,689
393,841

Competition

The
oil and gas industry is highly competitive. We compete with major integrated oil and gas companies, other independent oil and gas companies,
private equity-backed operators and individual producers, many of which have financial, technical and personnel resources substantially
greater than our own. As a result, we may be placed at a competitive disadvantage. Competitive factors include commodity prices, acquisition
costs, contract terms, access to capital, operational expertise and the quality and availability of service providers, including drilling,
completion and transportation services.

Competition
for oil and gas reserve acquisitions and development opportunities is significant. Our ability to acquire and develop additional properties
will depend on our ability to identify, evaluate, and consummate transactions in a timely manner in a highly competitive marketplace.

In
addition, the oil and gas industry competes with other energy sources to meet the energy requirements of industrial, commercial, and
residential consumers. Advances in alternative energy technologies and changes in consumer preferences and governmental policies
promoting alternative energy sources may affect demand for oil and natural gas and could adversely impact our revenues and results
of operations.

6

Markets
and Major Customers

As
a non-operator, we depend on third-party operators to conduct exploration, development, and production activities on our behalf. These
operators generally determine drilling schedules, development activities, production levels, and operating practices. Accordingly, our
production volumes, operating results, and costs are influenced by the decisions and performance of such operators, over which we have
limited control.

Market
factors affect both the quantities of oil, natural gas and natural gas liquids production and the prices received for such production.
These factors include the level of domestic and international production; imports and exports of crude oil and natural gas; global and
regional supply and demand balances; domestic and foreign economic conditions; geopolitical events; trade policies and tariffs; OPEC+
production decisions; weather conditions; transportation and pipeline capacity; and governmental regulations, including environmental,
energy conservation, climate-related, and tax laws.

The
market for our oil, natural gas, and natural gas liquids production depends on numerous factors beyond our control, including commodity
price volatility, domestic and foreign political and economic conditions, and the availability and cost of alternative energy sources.

Our
third-party operators market and sell production from properties in which we own a working or royalty interest. Proceeds attributable
to our interest are collected and remitted to us either by the operator or by the purchaser, depending on their contractual arrangements.
The counterparties, or payors, that remit such proceeds to us represent the sources of our operating revenues and income from investments
in LLCs. Sales attributable to payors that amounted to 10% or more for the years ended March 31 were as follows:

2026
2025

BTA Oil Producers, LLC
33 %
59 %

ExxonMobil Corporation
15 %
-

Historically,
the Company has not experienced significant credit losses on its oil and gas accounts, and management is of the opinion that significant
credit risk does not exist. Because there is a ready market for oil and gas production, we do not believe the loss of any individual
payor would have a material adverse effect on our financial position or results of operations.

Environmental
Regulation

The
oil and gas industry is subject to extensive regulation at the federal, state, and local levels. Environmental and energy-related regulations
are subject to ongoing review and may be revised or made more stringent over time. Various federal and state agencies, including the
Texas Railroad Commission, the Bureau of Land Management (the “BLM”), an agency of the U.S. Department of the Interior (the
“DOI”), the Federal Energy Regulatory Commission (“FERC”), the U.S. Environmental Protection Agency (the “EPA”),
the Department of Transportation (“DOT”), and the U.S. Occupational Safety and Health Administration (“OSHA”),
as well as state environmental and natural resources agencies, have regulatory authority over aspects of the operations conducted on
properties in which the Company owns an interest.

Under
certain environmental laws and regulations, including the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”),
operators and owners of properties may be subject to strict, joint and several liability for investigation, remediation, and removal
of contamination, regardless of fault or compliance with applicable laws at the time of the relevant activities. CERCLA and similar statutes
may impose liability on current and former owners and operators of a site, as well as on persons who arranged for disposal or treatment
of hazardous substances. As a result, government authorities or private parties may seek to recover cleanup costs or require remediation
of environmental conditions, including those arising from historical operations by prior operators. Because the Company is a non-operating
working interest owner in certain properties, it may, in certain circumstances, be held responsible for a portion of such costs under
applicable law.

7

Various
federal, state, and regional initiatives have been adopted or are under consideration to regulate greenhouse gas (“GHG”)
emissions, including through permitting requirements, emissions reporting obligations, or other regulatory or market-based mechanisms.
These regulations may result in increased compliance costs for operators of the Company’s properties, including costs associated
with monitoring, permitting, equipment upgrades, emissions controls, or the purchase of emissions allowances or credits. In addition,
such regulations could indirectly affect demand for oil and natural gas over time. The extent and timing of future climate-related regulatory
developments and their potential impact on operations and financial results remain uncertain. In addition, future climate-related regulations
or disclosure requirements, including those relating to emissions reporting or climate risk disclosure, may increase compliance costs
or require changes to the Company’s reporting practices.

We
did not incur any material capital expenditures for remediation or pollution control activities for the year ended March 31, 2026. Additionally,
as of the date of this report, we are not aware of any environmental issues or claims that will require material capital expenditures
during fiscal 2027.

Other
Regulation

Other
federal agencies with regulatory authority over the Company’s business include the Internal Revenue Service (the “IRS”),
the U.S. Securities and Exchange Commission (the “SEC”), and national securities exchanges such as the NYSE, as applicable.
Compliance with applicable laws, regulations, and reporting requirements administered by these and other regulatory bodies requires ongoing
effort and may result in additional costs. Because public policy, regulatory frameworks, and enforcement priorities may change over time,
the Company cannot predict the future cost or impact of compliance with such laws and regulations. However, the Company does not expect
that these regulatory requirements will affect its operations in a manner materially different from similarly situated companies in the
industry.

Title
to Properties

The
leasehold properties in which we own interests are subject to royalty, overriding royalty, and other burdens customary in the industry.
These properties may be subject to liens arising under operating agreements, current taxes, development obligations under oil and gas
leases, and other encumbrances, easements, and restrictions. We do not believe any of these burdens will materially interfere with the
use or operation of such properties.

Prior
to drilling an oil and natural gas well, it is customary in our industry for the operator to conduct a preliminary title examination
to identify material defects affecting the leasehold or mineral interests. In some cases, curative actions are required to address title
defects, which may result in additional expense or delay. The failure to cure such defects could delay or prevent the development of
the associated mineral interests. We believe the title to the properties in which we own an interest is generally good and defensible
in accordance with standards generally accepted in the oil and gas industry, subject to exceptions that are not expected to materially
impair the use or value of such properties.

Substantially
all of our properties are currently subject to liens under a deed of trust securing obligations under our credit facility.

Insurance

Our
operations are subject to all the risks inherent in the exploration, development, and production of oil and gas, including blowouts,
fires, and other casualties. We maintain insurance coverage customary for operations of a similar nature, but losses could arise from
uninsured risks or in amounts exceeding existing insurance coverage.

Executive
Officers

The
following table sets forth certain information concerning the executive officers of the Company as of March 31, 2026.

Name

Age

Position

Nicholas
C. Taylor

88

Chairman
and Chief Executive Officer

Tamala
L. McComic

57

President,
Chief Financial Officer, Treasurer, and Assistant Secretary

Donna
Gail Yanko

81

Vice
President

Stacy
D. Hardin

61

Secretary
and Assistant Treasurer

8

Set
forth below is a description of the principal occupations during at least the past five years of each executive officer of the Company.

Nicholas
C. Taylor was elected Chairman of the Board and Chief Executive Officer of the Company in September 2011 and continues to serve in such
capacity on a part-time basis, as required. He served as Chief Executive Officer, President, and Director of the Company from 1983 to
2011. Since July 1993, Mr. Taylor has been involved in the independent practice of law and other business activities. In
November 2005, he was appointed by the Speaker of the House to the Texas Ethics Commission, where he served until February 2010.

Tamala
L. McComic, a Certified Public Accountant and Chartered Global Management Accountant, became Controller for the Company in July 2001
and was elected President and Chief Financial Officer in September 2011. She served the Company as Executive Vice President and Chief
Financial Officer from 2009 to 2011 and Vice President and Chief Financial Officer from 2003 to 2009. Prior thereto, Ms. McComic served
as Treasurer and Assistant Secretary of the Company.

Donna
Gail Yanko was appointed Vice President in 1990. She also served as Corporate Secretary from 1992 to 2021 and, from 1986 to 1992, was
Assistant Secretary. From 1986 to 2015, on a part-time basis, she assisted the Company’s Chairman of the Board with
his personal business activities. Ms. Yanko also served as a director of the Company from 1990 to 2008.

Stacy
D. Hardin joined the Company in 2006 and was elected Corporate Secretary in September 2021. She has also served the Company as Assistant
Treasurer of the Company since 2010 and, from 2006 to 2021, as Assistant Secretary. Prior thereto, Ms. Hardin served as Assistant Controller.

Employees

As
of March 31, 2026, we had two full-time and two part-time employees. We believe that relations with these employees are generally satisfactory.
From time to time, we utilize the services of independent geological, land, and engineering consultants on a limited basis and expect
to continue to do so.

Office
Facilities

Our
principal offices are located at 415 W. Wall, Suite 475, Midland, Texas 79701, and our telephone number is (432) 682-1119. We believe
our facilities are adequate for our current operations and future needs.

Access
to Company Reports

Mexco
Energy Corporation files annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains
an internet website (www.sec.gov) that contains annual, quarterly and current reports, proxy statements and other information that issuers,
including Mexco, file electronically with the SEC.

We
also maintain an internet website at www.mexcoenergy.com. In the Investor Relations section, our website contains our Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other reports and amendments to those reports as soon
as reasonably practicable after such material is electronically filed with the SEC. Information on our website is not incorporated by
reference into this Form 10-K and should not be considered part of this report or any other filing that we make with the SEC. Additionally,
our Code of Business Conduct and Ethics and the charters of our Audit Committee, Compensation Committee and Nominating Committee are
posted on our website. Any of these corporate documents as well as any reports filed with the SEC are available in print free of charge
to any stockholder who requests them. Requests should be directed to our Corporate Secretary by mail to P.O. Box 10502, Midland, Texas
79702 or by email to mexco@sbcglobal.net.

9